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Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return
Abstract
Purpose: The aims of the research are twofold: (a) Exploring whether football club stocks can be considered an asset class of their own. (b) Investigating whether football stocks enable well-diversified investors to achieve more efficient risk-return combinations.
Research methods: Using efficient frontier optimization, a base portfolio, with standard stocks and bonds, and a corresponding enhanced portfolio, which includes football stocks in the investment opportunity set, are defined. This procedure is applied to four portfolio composition rules. Pairwise comparisons of portfolio Sharpe ratios include a test for statistical significance.
Findings: The results indicate a low correlation of football stocks and standard stocks; thus, football stocks could be considered an asset class of their own. Nevertheless, the addition of football stocks to a well-diversified portfolio does not improve its risk-return efficiency because the weak performance of football stocks eliminates their advantage of low correlation.
Originality and value: To the best of our knowledge, this is the first study to analyse the risk-return efficiency of football stocks from the perspective of a pure financial investor, i.e., an investor in football stocks who does not earn side benefits, such as strategic investors or fan investors.
Research implications: This study contributes to the evidence that investments in football are different from “ordinary” investments and need further research, particularly into market participants and their investment motives.
Practical implications: Football stocks are not attractive to pure financial investors. Thus, football clubs need to know more about which side benefits are appreciated by which kind of investor.
... In most studies, motivation scales are tested based on future purchase intentions of the product or the amount of money paid for the product. However, as incidental investors are football fans (Prigge & Tegtmeier, 2020) and no additional benefits are derived from higher crowdinvestment (Bretschneider & Leimeister, 2017), this strategy is not optimal for sports crowdfunding. The WTPP helped test the determination to participate in the equity crowdfunding campaign of football clubs. ...
... Thus, the leading role of psychological connection to sports entities in fan behavior was, again, confirmed. However, this shows that regardless of how investments in clubs are made, whether in the regular stock market (Buchholz & Lopatta, 2017;Huth, 2020), in fan bonds (Weimar & Fox, 2021;Wicker et al., 2016), or through equity crowdfunding, fan investors are the primary target group for the financial instruments of football clubs according to the Prigge and Tegtmeier (2020) typology. Their club investments are characterized by emotional attachment instead of traditional investment motivations. ...
... The results revealed only one extrinsic motivation, collecting rewards. This confirms that the shares of football clubs can be considered a separate asset class (Prigge & Tegtmeier, 2020) that is not of interest to professional financial investors looking to maximize the return on their investment (Huth, 2020). However, even if shares are not considered an attractive investment opportunity, their role is important to fans because of the status and decision making power gained. ...
Considering the inconsistency in the literature on crowdinvestment motivations and the uniqueness of football club investors, the purpose of this study is to identify the motivation to invest in football clubs through equity crowdfunding. Following Churchill’s scale development procedure, it is found that those who crowdinvest in football clubs are fans who highly identify with these teams. The fans’ motivations include supporting the cause of the campaign, acquiring the status of a football club owner, and gaining rewards. These findings show the dominance of intrinsic motivations among crowdinvestors of European football clubs, providing evidence for compensatory activities assumed in self-determination theory, which is the theoretical framework for this research. Moreover, we devise a motivation scale that can be adopted in future research on equity crowdfunding for football clubs. For sports managers, the results offer practical recommendations for marketing communication and relationship marketing of equity crowdfunding campaigns by football clubs.
... In contrast to technological start-ups, traditionally considered the main beneficiaries of crowdfunding (Kozioł-Nadolna, 2016; Leboeuf & Schwienbacher, 2018), football clubs have the advantage of a recognizable brand for an existing group of customers to whom they can easily target their campaigns. However, considering the specificity of sports consumers' behavior (Mullin, Hardy, & Sutton, 2014), the investment behaviors of this particular group differ from those of other sectors (Huth, 2020;Prigge & Tegtmeier, 2020;Weimar & Fox, 2021). It turns out that the fans investors, the main target group for football club shares, are primarily motivated intrinsically by the psychological connection to the sport entity they support without expecting profitable financial returns. ...
... The findings suggest a dominant role for intrinsic motivations among football club crowdinvestors: fan identification, supporting a campaign's cause, and the status of a football club owner. This supports evidence from previous work in the field of sports crowdfunding (Huth, 2018a(Huth, , 2018bKościółek, 2021, in press) and football fans' investments (Huth, 2020;Prigge & Tegtmeier, 2020;Weimar & Fox, 2021). According to SDT (Deci & Ryan, 2008), humans are intrinsically driven to satisfy three basic needs: autonomy (i.e., having control), relatedness (refers to having a sense of belonging), and competence (refers to self-efficacy in one's achievement). ...
PURPOSE: As the issue of the motivations of crowdinvestors is still heavily debated, empirical research has come to focus on specific industries and the heterogeneity of motivations within specific crowdfunding models. This study combines these two perspectives and considers the research question of the heterogeneous motivations of football club crowdinvestors. The aim of the study is to segment the football club crowdinvestors according to investment motivations. METHODOLOGY: In this study, the survey research method was used for a sample (n = 793) of crowdinvestors from the Wisla Krakow football club, and a two-step motivation-based segmentation approach was applied. The convenient sampling method was used as the club distributed the surveys electronically among all its crowdinvestors in July 2021. A cluster analysis, including Ward’s method with Euclidian distance and the non-parametric k-means method, was applied to segment the market. Differences between segments were assessed with chi-square tests for qualitative variables and Kruskal-Wallis H tests with Dunn’s post hoc tests for quantitative variables. A discriminant analysis successfully validated the segmenting procedure. FINDINGS: The crowdinvestors of football clubs were divided into three market segments: benefit-oriented (50.7%), club-oriented (45.3%), and goal-oriented (4.0%). This clustering solution was influenced by all of the previously identified motivations: fan identification, supporting a campaign’s cause, status of football club owner, rewards, and return on investment. The segments were also differentiated according to consumption-related behaviors (media consumption, word-of-mouth marketing, merchandise purchases, match attendance, and social media engagement) and socio-demographic profiles (age, marital status, income, and place of residence). With the exception of the goal-oriented niche, crowdinvestors of football clubs are fans who are highly identified with the club and focused on supporting the cause of the campaign. However, some of them (“benefit-oriented”) are more sensitive than others to the return on investment, rewards, and status that comes along with club ownership (“club-oriented”). Benefit-oriented crowdinvestors consume the club’s products to the greatest extent, while goal-oriented crowdinvestors are on the opposite side of the spectrum. IMPLICATIONS: Based on self-determination theory, no cluster with a predominance of extrinsic motivations was found. These results are in opposition to most crowdfunding studies, but are in line with sport management literature. Importantly, evidence was found showing that groups that are homogenous in terms of crowdinvestment activity can still be heterogeneous in terms of crowdinvestment motivations. This insight shows that crowdinvestment motivations should be considered in more detail than they have been in the past. The assumptions of the multi-needs-meeting phenomenon of crowdinvesting in football clubs were also confirmed. These outcomes provide sports managers with information about market segments of crowdinvestors that they can use to communicate their crowdfunding campaigns more effectively. ORIGINALITY AND VALUE: This study is the first to present the research-tested heterogeneity of investment motivations among football club crowdinvestors. It shows the instability of research results that focus on entire crowdfunding models and ignore the industry-related specificities and internal diversity of crowdinvestors. Moreover, it extends the area of research on fan investors in the football industry, which has, until this point, focused on investment motivations without taking their internal heterogeneity into account.
... Sebuah klub sepakbola dapat memperluas segmentasi pasar dan berkembang menjadi perusahan besar melalui pasar modal, terlebih perusahaan olahraga memiliki resiko yang lebih rendah daripada perusahaan yang bergerak pada sektor lain sehingga dapat menarik minat beli para investor pemula (Prigge & Tegtmeier, 2020). Pelaksanaan IPO perusahaan sepakbola disarankan tidak menunda agar sengaja dilakukan pada bulan yang sama denga penyelenggaraan FIFA World Cup karena dapat mengakibatkan penjualan saham jauh lebih rendah, hal ini sama saja dengan melewatkan tanggal pencatatan (Fjesme et al., 2023). ...
Penelitian ini berlandasan fenomena IPO perusahaan sepakbola pertama kali di Asia Tenggara yang dilakukan perusahaan sepakbola asal Indonesia (Bali United) dibawah PT Bali Bintang Sejahtera Tbk. pada tahun 2019. Terdapat klub lain yang mengonfirmasi akan segera menyusul melantai di pasar modal Indonesia. Namun, hingga tahun 2023 tidak ada kelanjutan hal tersebut. Penelitian ini bertujuan untuk mengetahui hambatan IPO perusahaan sepakbola pada Bursa Efek Indonesia. Metode yang digunakan pada penelitian ini yakni kualitatif dengan teknik pengumpulan data primer melalui wawancara bersama finance accounting specialist Persis Solo; manager of event, commercial, and business development PSS Sleman; dan project management Persija Jakarta. Sementara data sekunder melalui studi dokumen. Penelitian ini berhasil mengetahui hambatan utama perusahaan sepakbola melakukan IPO yakni belum memenuhi syarat IPO pada struktur organisasi perusahaannya, penyusunan laporan keuangan belum audit, dan neraca keuangan yang belum stabil.
... This may be true for the current situation, as at the end of 2019, there were 22 listed European football clubs. Furthermore, Prigge and Tegtmeier similarly argue that the advantages of listed finance are significantly offset by the fact that football stocks have returned less than standard stocks over the last 20 years [71]. In other words, comparing the overall economic data with the football sector, it has successfully decoupled from the overall economy. ...
The global football market has grown in the past three decades, and football clubs' sustainable financial operations have gradually gained attention. This study aims to construct a financial risk assessment model applicable to the football industry, explore globally listed football clubs' overall financial operating characteristics, and analyse the leading causes of the club's financial crisis. We selected a sample of 24 currently listed football clubs worldwide and an exploratory factor analysis (EFA) model to construct the model of financial risk assessment for football clubs. The model identified and classified the financial risk components for listed football clubs, thus facilitating risk warning and prevention for modern professional clubs. This study found that football clubs are at higher financial risk overall, with the following general characteristics: (1) small amount of listed capital; (2) high asset-liability ratio; (3) low net profits and a large proportion of clubs make losses; and (4) weak asset liquidity. Finally, the study discussed the leading causes of the financial crises of football clubs in both external and internal dimensions, providing a reference for the self-sustainability of clubs and football authorities.
... unpredictability of a club's sporting success. Reikin (2021) claims that such investments are designed for long payback periods, similarly, Lundgren and Heljeberg (2021) define football club assets as counterintuitive, which is a reason why institutional financial investors do not usually invest in football club securities (Huth, 2020;Prigge and Tegtmeier, 2020). The argumentation of Huth (2020) is confirmed by Litvishko et al. (2019), who identify two balance sheet particularities of the sports industry as specific risks: the unusual structure of non-current assets and the share of tangible assets. ...
Purpose
Since the beginning of the 2000s, investors have more frequently invested into professional football clubs, thereby radically changing the industry landscape. This review's purpose is to analyze and synthesize the state of research to understand motives, roles and implications of football club investors, and to provide recommendations for further research.
Design/methodology/approach
The paper presents an integrative literature review by identifying relevant English articles based on the search terms investor, owner, investment, ownership, shareholder and stakeholder in combination with soccer or football. Around 2,431 articles were reviewed. A total of 129 relevant articles was analyzed and synthesized within eight subject areas.
Findings
Investors in professional club football is a young research stream with a clear European focus. Investor motives and roles are diverse and implications are multidimensional. Investors mostly aim for indirect returns rather than pure profit- or win-maximization.
Research limitations/implications
Football clubs comprise an own investment class for which the identified, unique specifics must be considered to develop a financially successful investment model. Thorough academic research of investors' inherent characteristics, investor-club pairings and the pillars of long-term strategies for successful investor-club liaisons are avenues of future research. Furthermore, the results illustrate the need for research outside of Europe.
Originality/value
The paper is the first systematic, integrative review of existing literature in the domain of equity investments into professional club football. The findings genuinely show that, depending on the investor type and ownership structure, investors have a wide impact in professional club football.
... This may be true for the current situation, as at the end of 2019, there were 22 listed European football clubs. Furthermore, Prigge and Tegtmeier similarly argue that the advantages of listed finance are significantly offset by the fact that football stocks have returned less than standard stocks over the last 20 years [71]. In other words, comparing the overall economic data with the football sector, it has successfully decoupled from the overall economy. ...
The global football market has grown in the past three decades, and football clubs' sustainable financial operations have gradually gained attention. This study aims to construct a financial risk assessment model applicable to the football industry, explore globally listed football clubs' overall financial operating characteristics, and analyse the leading causes of the club's financial crisis. We selected a sample of 24 currently listed football clubs worldwide and an exploratory factor analysis (EFA) model to construct the model of financial risk assessment for football clubs. The model identified and classified the financial risk components for listed football clubs, thus facilitating risk warning and prevention for modern professional clubs. This study found that football clubs are at higher financial risk overall, with the following general characteristics: (1) small amount of listed capital; (2) high asset-liability ratio; (3) low net profits and a large proportion of clubs make losses; and (4) weak asset liquidity. Finally, the study discussed the leading causes of the financial crises of football clubs in both external and internal dimensions, providing a reference for the self-sustainability of clubs and football authorities.
... It is possible that the financial debts of the clubs and the lack of their income prompted the participants to address the privatization, investment, and ownership issues in this study. It seems that it is possible to change the ownership structure of the football clubs (e.g., implementing privatization plans, selling the shares of the clubs to rich people, and turning the clubs into public companies) (Gruettner, 2019;Prigge and Tegtmeier, 2020;Hamil et al., 2013) in order to promote their economic sustainability (Buchholz and Lopatta, 2017). Considering these cases, it can be stated that privatization, which constitutes an innovation and a change in the ownership structure of Iranian football clubs, is necessary for achieving economic sustainability. ...
Purpose
Financial problems of football clubs during economic crises (such as COVID-19 pandemic) highlight the necessity of achieving economic sustainability. In addition, the economic sustainability of football clubs is accepted as a principle of the development of sports business. Therefore, it is reasonable to conduct a study with the aim of examining economic sustainability in the field of sports club management.
Design/methodology/approach
The present study adopted a qualitative approach to research and used semi-structured interviews in order to develop a framework for the economic sustainability of football clubs. A total of 13 members of football clubs in the Iranian premier league participated in this study.
Findings
The findings highlighted the fact that a number of factors, including media and social networks, entrepreneurship and development of club business, commercialization of the club, privatization, investment and ownership, strategic communication plan, financial management and management instability, promoted the economic sustainability of football clubs and improved their financial performance.
Originality/value
This study highlighted the importance of the changes in the structure of football clubs and the strategic plans for promoting entrepreneurship and commercialization. Moreover, it underlined the major role of the environmental and management components of football clubs in their financial sustainability.
... At that time, it was assumed that these were investors driven by their identification with the club they supported, and that conventional investment-related motivations were of secondary importance to them (Huth, 2020;Wicker, Whitehead, Johnson, & Mason, 2016). For this reason, it is suggested to classify sports club shares as a separate class of assets, which are not attractive to typical investors seeking to maximise return on investment but attractive to those sympathising with the share issuer in question (Huth, 2020;Prigge & Tegtmeier, 2020). What is equally important is that research on the motivations of people investing in sports club crowdfunding campaigns suggests that while shares may not be perceived as an attractive investment instrument, they still play a significant role in raising funds. ...
This chapter presents a synthesis of the results of the existing research on crowdfunding in the context of sports clubs, with reference to the theoretical and conceptual framework presented in the earlier part of the book. The primary objectives of this chapter are (i) to characterize the specific nature of crowdfunding campaigns in the context of sports clubs and (ii) to develop assumptions for a marketing strategy model for sports club crowdfunding campaigns under the equity crowdfunding model. Specifically, the chapter provides information on the typology of sports crowdfunding, the extent to which sports clubs utilize equity crowdfunding, the characteristics of selected crowdfunding campaigns conducted by sports clubs, the motivations and profiles of the segments of crowdinvestors in sports clubs, highlighting their unique aspects, and the value proposition offered to crowdinvestors in sports clubs, along with the manner and limits of their delivery.
... This is a manifestation of what is referred to as fan activism, whereby fans organise themselves to act together for the good of 'their team' and their level of emotional connection to the club increases in times of crisis. According to Prigge and Tegtmeier (2020), trading in sports club shares differs from trading in shares of other entities so much that the former can even be considered a separate asset class, with fundamental internal economic similarities and characteristics that distinguish them from other assets that are not part of that class. Given that investments in sports club shares are made primarily by the most committed fans, they can be considered as an example of collectors' assets, which yield intangible benefits to their buyers (e.g. ...
This chapter aims to explore how sports clubs can benefit from crowdfunding by examining their unique nature and challenges. As crowdfunding is primarily a financing tool that requires customer-focused marketing, this chapter addresses a range of related issues: (i) the legal and organisational basis for sports club operations, (ii) sources of funding for both amateur and professional sports clubs, (iii) the place of sports clubs in sports marketing, (iv) the marketing-mix elements that drive sports club activities, (v) the distinctive consumer behaviour of sports club fans, (vi) the profiles of different fan segments, and (vii) the investment decisions related to sports clubs.
... Further research by Prigge and Tegtmeier (2020) recommends that football stocks be considered an asset class of their own and unattractive to traditional "pure" financial investors. Follert et al. (2020) call for transparency in allocating budgets and clear guidelines for FIFA officials and bodies about their rights and accountability. ...
Evidence of football fraud and how it can be addressed is fragmented in the literature, lacking a holistic view. This paper provides a holistic understanding of fraud in professional football through a comprehensive framework that encompasses (i) the typologies and methods of perpetrating fraud in football, (ii) the enablers of football fraud, and (iii) how to mitigate fraud risk in professional football. Additionally, it highlights literature gaps and suggests new directions for future research to open up academic debates on this significant topic. The findings show no evidence of external fraud reported in the literature. However, insider fraud, particularly corruption in all its forms, is well documented. There is minimal evidence of other insider fraud types, such as asset misappropriation and financial fraud, and even fewer studies discussing fraud against football players and fans. The analysis highlights various fraud risk factors in football, ranging from financial and sporting performance, competitive balance, and financial regulation issues to the lack of accountability, anti-fraud controls, governance mechanisms, and weak integrity culture in FIFA and football clubs. The paper summarizes various other motives and opportunities enabling football fraud and proposes a holistic framework for mitigating fraud risk in football.
... Investments in football stocks are quite interesting because this asset class has a low correlation with standard stocks (Prigge and Tegtmeier 2020). Football stocks are attractive to investors who follow football companies, probably because their market trend could be influenced by the strong impact of the mood of investors as football in fact affects millions of people all over the world. ...
We examine the link between the corporate events of football clubs and the trend of their stock returns using a proprietary database of roughly 2000 events, based on the hypothesis that the repercussions of these occurrences affect the future decisions of investors. We study the stock price performance of 22 European football listed firms from January 2006 to April 2021. These are tied to two distinct events: (a) a coach change and (b) the acquisition of football players. Using the event study approach, we claim that investor emotion drives the stock price reaction to these specific occurrences, contributing to behavioural finance and asset allocation decisions. Our findings reveal that such events have an economic and statistically significant influence on stock prices. Even though there are country-specific peculiarities that might alter market reactions, we can maintain that there is a favourable influence of player transfers on stock performance, which is also produced by positive emotion.
... This concentration process has brought a new kind of investor into European football, as institutional investors have withdrawn from listed English football clubs (Wilson et al., 2013). Prigge and Tegtmeier (2020) distinguished between three kinds of non-financial investors in football-clubs. These are: strategic investors investing in football clubs to deepen their relationship with them, as in the case of German clubs as described by Bühler (2006). ...
Purpose: The aim of this paper is to determine whether football clubs are valued according to financial parameters, as in other profit-seeking investments, or depending on the subjective preference of the buyers, in situations where buyers seek emotional rewards or a status symbol.
Design: This work analyses a unique data set of the prices of actual transactions of shares from clubs in the big European leagues from 2001 until 2019. A theoretical model is presented introducing financial, sporting, and localisation variables to study their influence in market value.
Findings: We have found that the valuation of football clubs in acquisitions is influenced by financial parameters, as in other profit seeking investments, and does not depend on the subjective preference of the buyers.
Practical implications: Our findings show the end of the alignment of interests between new football owners and fans or current organisers of competitions, due to the preferences of the new investor profit-seekers of an American model of sport.
Research contributions: The ownership of football clubs in the big leagues has changed dramatically in the last years. For the first time, to the best of our knowledge, the present paper demonstrates the opportunity of analysing the valuations of the football industry with actual data from the transactions.
Keywords: sport economics, football, valuation, firm ownership, sport management, investment
... This finding is in line with the assumption that for institutional investors the pure financial return from share price change and dividend is not competitive and, therefore, they leave the market. In contrast, the fan investors as sentimental investors receive a satisfying return from holding the shares of their favorite club because they earn an emotional extra return in addition to the pure financial return (Prigge and Tegtmeier, 2020; the same logic would apply to other investors who derive an extra return from holding the football stock as the sporting goods manufacturer does assuring its position of being the club's major sporting goods supplier by holding a stake in the club) (as buying overvalued shares could be rationalized for fan investors this way, it could be questioned whether contrasting them with rational investors, implying that the former are irrational, is appropriate. However, this question will not be discussed here). ...
Purpose
The purpose of this paper is to test the weak-form efficiency of listed European football stocks in the sample period 2012–2020.
Design/methodology/approach
Three powerful tests for randomness are performed, that is, autocorrelation of returns analysis via the Ljung and Box (1978) test, variance ratio test by Lo and MacKinlay (1988) and runs test (Wald and Wolfowitz, 1940).
Findings
Results are mixed. Autocorrelation analysis and variance ratio test reject the random walk hypothesis and are, therefore, in line with the findings of Ferreira et al. (2017). In contrast, the runs test only leads to rejection of the random walk hypothesis for five out of 20 football stocks. Interestingly, this applies to shares with the lowest trading volume.
Practical implications
The market for stakes in football clubs can be expected to continue to grow in the future. Thus, the issue whether the price signals derived from listed football clubs are reliable inputs when negotiating the price for a football club stake in a private transaction is of increasing importance.
Originality/value
This study complements, and partly challenges, the results of Ferreira et al. (2017), the only other study in this field, by applying other methods and analyzing a more recent sample period.
Club patrons in German lower-league football are a largely under-researched social phenomenon. The aim of this article is to address this gap in the literature by focusing on their motivation for involvement in football at this level and the important function that they perform. A patron is defined as an individual who provides financial support for club without expecting a direct financial return on their investment. Using a Bourdieuian methodology, however, we argue that patrons do indeed receive a return on their investment. They achieve this by converting economic capital into social capital, thereby enhancing their stock of symbolic capital. Using qualitative interviews, this article offers a categorization of club patrons in order to shed light on how they exert their influence within the club itself and in the wider community.
This is the first book to focus on crowdfunding in sport. Crowdfunding is an important new financial instrument that is becoming more popular with sports organisations, and this book examines the research evidence for crowdfunding and considers how it might be successfully implemented.
Presenting international cases and data, including from European football, the book explains how crowdfunding campaigns have to be fully integrated with strategic marketing plans and require a solid understanding of the needs and motivations of potential investors, consumers, and fans. The book sets out a theoretical framework for applying strategic marketing in the context of crowdfunding in sports clubs, introduces the key characteristics of the sports crowdfunding market and funders’ behaviours in the crowdfunding campaigns of sports clubs, examines the market segments of the campaigns’ funders, and presents recommendations for developing marketing-mix programs to target them.
This is important reading for any researcher, advanced student, or practitioner with an interest in sport business, sport marketing, sport finance, consumer behaviour in sport, or entrepreneurship, innovation, or technology in sport.
Research question
We identify the key components of the business models (BMs) of professional European football clubs, introducing a structured business model approach to sport management and presenting a BM taxonomy.
Research methods
To derive a picture of European football clubs’ BMs, we develop a BM taxonomy in three iterations. In the first step, we conduct a structured literature review. Second, we analyse case studies and subsequently examine 98 real-world objects. We utilise the 98 clubs as real-world objects of Europe's top five leagues during the 2018/19 season, the last complete season prior to the COVID-19 pandemic.
Results and findings
Our taxonomy, consisting of 63 characteristics allocated to 13 dimensions, shows and structures the components of European football clubs’ value creation mechanisms. Our evaluation shows that the clubs follow different BMs, proving our taxonomy's applicability.
Implications
We contribute to theory by identifying and illustrating the existence of different BMs in European professional football. Further, our taxonomy assists club managers to analyse their BMs, enabling them to improve their managerial performance for sustainable success and to avoid mismanagement.
Purpose: The presented study aims to identify and classify the value factors that influence the value of football clubs from the stakeholder perspective, while also discussing how these factors can affect the choice of valuation methods. The paper considers how value should be measured from the perspective of stakeholders. Research focuses on clubs embedded deeply in a wide interrelated network of stakeholders.
Design/methodology/approach: A mixed research approach was established in order to obtain a more holistic understanding of value creation, value factors and measurement. The research builds on observational study with a mix of retrospective longitudinal study of Polish men's football clubs and interviews with stakeholders, which are then triangulated as part of a critical discussion on valuation methods.
Findings: The results show the most significant value factors determined by the stakeholders. The study discusses which performance and value measures should be used to measure value for the stakeholders of football clubs. Intellectual capital methods and asset-based methods should definitely be relied on as part of measuring the performance of football clubs within the stakeholders' network. All findings suggest the use of the multivariate valuation method in accordance with previous research.
Originality/value: The classified key value factors enable the management of football clubs to properly manage stakeholder relationships and address various stakeholders' concerns in a sustainable way. The paper proposes a research process, which may also be implemented in other studies in the non-profit sector and contributes to the literature in the fields of sports management.
Purpose
Utilizing the capital asset pricing model (CAPM), the purpose is to analyze whether the stock prices of the corporation that owns sport teams fluctuate based on team performance in the Chinese Super League (CSL).
Design/methodology/approach
Several CSL teams are publicly owned corporations. As such, the authors look to see if on-field performance impacts the stock price of the firms. Using the news model from previous research, seemingly unrelated regressions are estimated on CSL games from 2014 through 2017.
Findings
The results from the main models indicate some evidence of a statistical relationship between on-field team performance and stock price. Furthermore, the findings for individual teams across markets did not hold consistent across different markets. More specifically, the authors found some instances where successful on-field performance led to a decline in stock prices.
Originality/value
The present study further contributes to the growing literature related to on-field performance and stock prices. Unlike previous research, the use of the CSL as the empirical setting provides the opportunity to use multiple stock markets which provides an opportunity to further examine this relationship. Finally, the study contributes broadly to the literature on professional sports ownership structures around the world.
Eine zentrale sportpolitische Frage im deutschen Profifußball ergibt sich aus der Diskussion um die Aufhebung der 50+1-Regel: Sollten professionelle Fußballklubs in Deutschland weiterhin von Vereinen oder von Investoren_innen kontrolliert werden? Vor dem Hintergrund des Stakeholder-Ansatzes erscheinen die bisherigen Untersuchungen der Perspektiven von Fußballklubs und Fußballfans von besonderer Bedeutung. Unberücksichtigt blieben bislang die Investoren_innen als Stakeholder-Gruppe. Aufgrund der Begrenzung ihres Einflusses durch die Regel, der damit einhergehenden unmittelbaren Betroffenheit sowie der zunehmenden Bedeutung von Investoren_innen im deutschen Profifußball werden erstmalig die Perspektiven von Investoren_in-nen zur 50+1-Regel und deren Zukunft aufgezeigt. Basierend auf den empirischen Ergebnissen werden Gemeinsamkeiten und Unterschiede der Perspektiven zwischen Fußballklubs, Fußballfans und Investoren_innen aufgedeckt. Sie bilden eine Diskussionsgrundlage, um eine zukünftige Entscheidung hinsichtlich einer Beibehaltung oder Aufhebung stakeholderorienwtiert beurteilen zu können.
Alternative assets have become as important as equities and fixed income in the portfolios of major investors, and so their diversification properties are also important. However, adding five alternative assets (real estate, commodities, hedge funds, emerging markets and private equity) to equity and bond portfolios is shown to be harmful for US investors. We use 19 portfolio models, in conjunction with dummy variable regression, to demonstrate this harm over the 1997-2015 period. This finding is robust to different estimation periods, risk aversion levels, and the use of two regimes. Harmful diversification into alternatives is not primarily due to transactions costs or non-normality, but to estimation risk. This is larger for alternative assets, particularly during the credit crisis which accounts for the harmful diversification of real estate, private equity and emerging markets. Diversification into commodities, and to a lesser extent hedge funds, remains harmful even when the credit crisis is excluded.
Purpose
This paper aims to provide empirical evidence on competitive balance in the “big five” European football leagues, namely, the English Premier League, French Ligue 1, German Bundesliga, Italian Serie A and Spanish La Liga.
Design/methodology/approach
This paper uses recognised measures of competitive balance to measure levels of concentration (within-season competitive balance) and dominance (between-season competitive balance) in the selected leagues over 22 seasons between 1995/96 and 2016/17.
Findings
French Ligue 1 emerged as the most balanced league in terms of both concentration and dominance measures. The analysis also points to a statistically significant decline in competitive balance in all leagues apart from Serie A (Italy).
Originality/value
The findings of this study are of concern for the league organisers. Competition intensity is a key component of a sport league, and a league that is dominated by one or a select few clubs is less attractive within the marketplace. This paper presents challenges at the league governance level for the five leagues examined.
This paper examines the impact of parachute payments in English league football in relation to the competitive balance of the second tier (the Championship). League results and parachute payment fees data were collected for the 11 seasons between 2006/07 and 2016/17. Overall competitive balance was analysed as well as specific aspects of competition that are fundamental to the league—promotion, survival and relegation. Our results show that an increase in the number of clubs with parachute payments and the overall value of these payments coincides with a reduction in competitive balance in the Championship. Furthermore, clubs with parachute payments are twice as likely to be promoted to the English Premier League and considerably less likely to suffer further relegation to the third tier (League 1). The paper therefore proposes either a re-distribution of parachute payments, the abolition of them completely, or a handicap points system to improve competitive balance.
When introducing UEFA’s Financial Fair Play (FFP) it was argued that as a beneficial side effect competition in European football leagues should become more equilibrated and perceived as being fairer. Based on a hand-collected dataset on league results, player market values as well as investor payments of more than 300 European football clubs, we scrutinize the impact of FFP on the competitive landscape in major European football leagues. By applying a fixed-effect panel regression difference-in-differences approach, we find results that are consistent with the view that FFP might have further amplified the competitive imbalance. This might be caused by the fact that FFP raises some barriers against the entrance of new investors. Moreover, we present evidence that FFP supports the former season’s winner in terms of budget shares in the upcoming season. Overall, our results support the view that FFP turns European football leagues less equilibrated and even tends to freeze current hierarchies.
This paper challenges the prevalent notion that family-owned firms are more risk averse than publicly owned firms. Using behavioral theory, we argue that for family firms, the primary reference point is the loss of their socioemotional wealth, and to avoid those losses, family firms are willing to accept a significant risk to their performance; yet at the same time, they avoid risky business decisions that might aggravate that risk. Thus, we propose that the predictions of behavioral theory differ depending on family ownership. We confirm our hypotheses using a population of 1,237 family-owned olive oil mills in Southern Spain who faced the choice during a 54-year period of becoming a member of a cooperative, a decision associated with loss of family control but lower business risk, or remaining independent, which preserves the family's socioemotional wealth but greatly increases its performance hazard. As shown in this study, family firms may be risk willing and risk averse at the same time.
Football clubs listed on Istanbul Stock Exchange suggests an interesting way of testing stock price behaviors to different types of news about both sportive success related and non-sports related events. Strong football club stock price reactions to surprising game results and the lack of reaction to betting odds is related with the dominated structure of Turkish Football League by the big four; Galatasaray (GS), Fenerbahce (FB), Besiktas (BJK) and Trabzonspor (TS). Coherent with this idea we conclude that GS and FB stocks react strongly to unexpected game results and derby matches. Other local league match wins do not have such an impact on stock prices. Moreover especially for FB related news rather than game results such as match-fixing case explain most of the price volatilities of the sport stocks. There is also some limited support for the notion that GS and FB stock prices are more affected by the bad news compared to good news.
Purpose
– The purpose of this paper is three‐fold. First, to explore the relationship between the financial and sporting performance of clubs competing in the English Premier League (EPL). Second, to investigate the effect of different models of EPL club ownership on financial and league performance. Third, to review the finances of EPL clubs in the context of UEFA's Financial Fair Play regulations.
Design/methodology/approach
– Financial data from annual reports for the period 2001‐2010 was collected for 20 EPL clubs. Correlation analysis was conducted to examine the relationship between the finances of EPL clubs and their league position. One‐way analysis of variance (ANOVA) tests were then used to examine the effect of ownership type on clubs’ financial and league performances. Where the results of ANOVA testing revealed statistically significant differences between groups, these were investigated further using appropriate post hoc procedures.
Findings
– The stock market model of ownership returned better financial health relative to privately owned (domestic and foreign) clubs. However, clubs owned privately by foreign investors or on the stock market performed better in the league in comparison with domestically owned clubs. The stock market model was more likely to comply with Financial Fair Play regulations.
Originality/value
– The paper confirms empirically that football clubs that float on the stock market are in better financial health and that clubs in pursuit of short‐term sporting excellence are reliant on substantial investment, in this case from foreign investors.
This paper aims to analyze how systemic thinking might contribute to investigate the interaction between company internal organization, financial structure and corporate governance. We focus our analysis on professional football teams as this special business combination provides an evident example of companies whose performance cannot be evaluated considering only financial returns or shareholder value. The investments of a professional football team are mainly in intangible resources, first and foremost in the skills and the competences of players, coaches, the general manager, and the medical staff. At the same time, the final outcome will include, both financial income, and intangible assets, like experience, popularity, reputation. The latter will pertain not only to the shareholders but to all the professionals involved, who will benefit of a higher market value for their services. Furthermore the supporters are an important component of the firm’s value too, because a substantial portion of future cashflows depends on the presence of a loyal customer base, whose claims cannot be disregarded without consequences on the economic value created by the organization. The traditional economic approach, correlating residual claimants with residual control rights and therein corporate governance, cannot be applied in presence of residual claimants who are different from shareholders. A professional football team strategy requires a multi-constituency systemic approach to be effectively implemented and to correctly evaluate its performances. Nowadays football is a business and several professional football teams are listed companies. Nonetheless many of them are experiencing financial losses, high debt and difficulties in funding their investments. Are these symptoms of a failure in creating economic value? Financial statements only give a true and fair assessment of value reporting assets and liabilities at their historical value, but where is the real value? How can we reliably assess the economic value of a football team? And who really owns those intangible assets that represent the largest fraction of its economic value? Moving from these considerations, can we reasonably imagine that a good corporate governance model should take into account only shareholders’ interests? According to our conclusions this is not the case, not only for professional football teams but also for many other businesses whose underlying logic cannot be understood without the lens of a systemic approach.
Since the first initial public offering of a European football (soccer) club in 1983, more than forty other clubs have experienced a venture in the stock market. In this paper, it is investigated how much relevant and successful these experiences of listing and floating football clubs at the stock exchange have been. First, by showing that investing in the Dow Jones StoXX Football index is of little attractiveness in the perspective of an investor's efficient overall asset allocation. Then in examining the determinants of a football club's fair value and the relationship between stock performances and sporting results. Finally, an approach (alternative to the Anglo-American model of capitalism) of corporate governance, based on the concept of a soft budget constraint, is applied to European football clubs taking stake of their lasting financial deficits and debts. This alternative theoretical approach paves the way for an empirical testing of a vicious circle between negotiating higher TV rights revenues and player wage inflation.
The importance of governance in football has been underlined recently by the UK government’s cross-party enquiry which, amongst other issues, explored debt levels and ownership patterns in football. This article addresses the latter of these themes by exploring ‘new directors’ ways of developing revenue and potentially extracting profits from football in the twenty-first century. By embedding the argument into discourses about the globalisation of the English Premier League (EPL) that borrow from Castells’ notion of the ‘network society’, I critically identify four potential areas in which ‘new directors’ can make money from associations with football. These are: (i) the proliferation of deregulated television revenues; (ii) using a football club as a vessel to promote other businesses; (iii) overseas stock market floatation; and (iv) promoting a football club into the EPL.
Football is not only the most popular sport in Greece; it is also a sport with remarkable economic and political dimensions. Operating in such a perplexing environment, managers of professional football clubs are often confronted with equally complex tasks. In order to make the best possible decisions, managers need to prioritize these tasks based on identifying the stakeholder who really matters at any given time. This article, hence, uses the lens provided by the Mitchell et al. framework to identify the most salient stakeholders in Greek professional football that managers should pay attention to, and suggests practices that could or should be adopted for the best possible results.
Zusammenfassung
Die 50+1-Regel soll im deutschen Profifußball den beherrschenden Einfluss eines Muttervereins über eine Profifußballabteilung gewährleisten, wodurch historisch geprägte Mitbestimmungsmöglichkeiten von Vereinsmitgliedern bzw. Fans bewahrt werden. Die anhaltende Diskussion um die Zukunft der Regel gibt unter Beachtung des Stakeholder-Ansatzes Grund zum Anlass, die Interessen von Fußballfans zu fokussieren. Erstmalig wurden dazu in den Jahren 2011 (n=3114) und 2017 (n=3739) die Argumente für eine Beibehaltung, die Argumente für eine Aufhebung sowie die Präferenz hinsichtlich der Zukunft der 50+1-Regel empirisch erhoben. Die Ergebnisse zeigen eine zeitunabhängige Befürwortung der Beibehaltung der Regel, wobei ergänzend (a) eine anhaltende Befürwortung partizipativer Argumente für eine Beibehaltung, (b) die zunehmende Befürwortung des Ausschlusses von Multi-Club Ownership durch die 50+1-Regel sowie (c) der Rückgang gesellschaftlicher und von Tradition geprägter Argumente für eine Beibehaltung hervorzuheben sind.
This is the slightly updated and published version of the article that circulated first as HSBA Comments 2019.
Hamburg-based professional football club FC St. Pauli, playing in the Second Bundesliga, announced to introduce an innovative financing model, most probably this year. The plan is to sell parts of their stadium to a cooperative. Members and fans of supporters could buy shares of the cooperative that in turn uses these funds to buy a stake of the stadium from the FC St. Pauli who can then use the proceeds to fund their professional football department. The concept is innovative as it would allow equity funding from small shareholders, keeping at the same time the professional football department within the legal form of the members’ association (e.V.). Thus, there is no need to outsource the professional football department in a corporate entity. This paper analyzes this cooperative structure on the basis of the currently publicly available information.
Cryptocurrencies are a new emergence at the intersection of technology and finance. It is therefore of particular interest whether cryptocurrencies can form a new asset class or need to be subsumed under an existing one. We find that cryptocurrencies show characteristics of a distinct asset class based on strong internal correlation, an absence of correlation with any traditional asset class as well as sufficient market liquidity, while market stability has room for improvement. Adding cryptocurrency to traditional portfolio structures may lead to significant and persistent risk-adjusted outperformance. These results support the careful introduction of cryptocurrencies into the asset management mainstream.
Research question: Due to the reinforced conditions of official regulatory credit screening procedures of Basel II and Basel III, credit is now more difficult to obtain for risky business models such as sport clubs. Therefore, alternative, supporter-based financial instruments have become more important. The aim of the study is to identify factors that influence the purchase decision of actual and potential individual investors of financial instruments of football clubs.
Research methods: We used a standardized online questionnaire to track finance-related, club attachment-related and sociodemographic factors that describe potential or actual European investors in supporter-based financial instruments. In total, 760 respondents completely filled out the questionnaires.
Results and findings: Our bivariate and multivariate findings indicate that club attachment is essential for an investment in a football club. The results also underline that traditional investment objectives are more or less irrelevant for supporter-involved financial instruments.
Implications: Investors expect an emotional return that compensates their financial efforts. Therefore, football clubs can act differentially in comparison to other firms issuing financial instruments such as stocks and bonds. The individual investors of football club-related financial instruments do not expect or require a financial return of the issuing football club.
Purpose: This paper aims to test the so-called “Sell in May” effect in globally listed private equity markets based on monthly data covering the period 2004-2017. Methodology: Ordinary least squares regressions, generalized autoregressive conditional heteroscedasticity (GARCH) regressions, and robust regressions are used to investigate the existence of the “Sell in May” effect in globally listed private equity markets. Additionally, we conduct robustness checks by dividing our sample period into two subperiods: pre-financial and post-financial crisis periods.
Findings: We find limited statistically significant evidence for the “Sell in May” effect. In particular, we observed a statistically significant “Sell in May” effect when taking time-varying volatility into account. These findings indicate that the “Sell in May” effect is driven by time-varying volatility. By contrast, economic significance as measured by visual return inspection and the magnitude of the estimated “Sell in May” coefficients in combination with their positive signs was found to be considerable. Practical implications: Our findings are important for all kinds of investors and asset managers who are considering investing in listed private equity.
Originality/value: The authors present a novel study that examines the “Sell in May” effect for globally listed private equity markets by using LPX indices, offering valuable insight into this growing asset class.
Purpose: This article explores whether stocks in football clubs are valued in line with the valuation of other capital assets in the capital market. Moreover, it analyzes the risk profile of football stocks. By taking this perspective, the article also contributes to the discussion on the motives of those who invest in football clubs, particularly the question of whether they expect extra benefits—i.e. in addition to dividends and share price appreciation, from the investments.
Methodology: The empirical study analyzes the share prices of 19 listed European football clubs from January 2010 to December 2016. Building on the capital asset pricing model (CAPM), we used Zellner’s (1962) seemingly unrelated regressions (SUR).
Findings: The results indicate that the majority of the football clubs in our sample are overvalued. This implies that investments in football stocks are mainly attractive for those investors who expect to derive extra benefits from their investment. That might be likely for strategic, patron, and fan investors, but not for purely financial investors.
Research limitations/implications: As a next step, more advanced factor models could be applied to the analysis.
Practical implications: For investors, our results imply that portfolio diversification is particularly beneficial while buying football stocks. For football clubs, the rather low general market risk, combined with the overvaluation, leads to low equity costs when new shares are issued.
Originality/value: Our results suggest that dividends and share price appreciation are not the only benefits football stock owners derive from the stocks, thus underlining that further investigations in their motives to hold football stocks are very promising.
While several clubs in England have established possibilities for co-determination by supporters as part of the supporters’ trust movement, in Germany a repeal of the so-called ‘50 + 1 Rule’ is being discussed. The German ‘50 + 1 Rule’ was created to exclude controlling investors’ influence on clubs, therefore ensuring that non-profit clubs and their members have the decision making power over the management of their professional football team. Due to the ‘50 + 1 Rule’ affecting sociological themes like participation of club members, oligarchization and commercialization, we examined the interests of club members with regards to the rule. Club members were asked about their arguments for retention, as well as their arguments for repeal and their preference regarding the future of the ‘50 + 1 Rule’. The empirical results showed an endorsement of the rule, with advocacy largely explained in the context of participation, the exclusion of multi-club ownership, and the avoidance of increasing commercialization.
Purpose
The purpose of this paper is, to study macroeconomic risk factors driving the expected stock returns of listed private equity (LPE). The authors use LPE indices divided into different styles and regions from January 2004 to December 2016 and a set of country stock indices to estimate the macroeconomic risk profiles and corresponding risk premiums. Using a seemingly unrelated regressions (SUR) model to estimate factor sensitivities, the authors document that LPE indices exhibit stock market βs that are greater than 1. A one-factor asset pricing model using world stock market returns as the only possible risk factor is rejected on the basis of generalized method of moments (GMM) orthogonality conditions. In contrast, using the change in a currency basket, the G-7 industrial production, the G-7 term spread, the G-7 inflation rate and a recently proposed indicator of economic policy uncertainty as additional risk factors, this multifactor model is able to price a cross-section of expected LPE returns. The risk-return profile of LPE differs from country equity indices. Consequently, LPE should be treated as a separate asset class.
Design/methodology/approach
Following Ferson and Harvey (1994), the authors use an unconditional asset pricing model to capture the structure of returns across LPE. The authors use 11 LPE indices divided into different styles and regions from January 2004 to December 2016, and a set of country stock indices as spanning assets to estimate the macroeconomic risk profiles and corresponding risk premiums.
Findings
Using a seemingly unrelated regressions (SUR) model to estimate factor sensitivities, the authors document that LPE indices exhibit stock market ßs that are greater than 1. The authors estimate a one-factor asset pricing model using world stock market returns as the only possible risk factor by GMM. This model is rejected on the basis of the GMM orthogonality conditions. By contrast, a multifactor model built on the change in a currency basket, the G-7 industrial production, the G-7 term spread, the G-7 inflation rate and a recently proposed indicator of global economic policy uncertainty as additional risk factors is able to price a cross-section of expected LPE returns.
Research limitations/implications
Given data availability, the authors’ sample is strongly influenced by the financial crisis and its aftermath.
Practical implications
Information about the risk profile of LPE is important for asset allocation decisions. In particular, it may help to optimally react to contemporaneous changes in economy-wide risk factors.
Originality/value
To the best of authors’ knowledge, this is the first LPE study which investigates whether a set of macroeconomic factors is actually priced and, therefore, associated with a non-zero risk premium in the cross-section of returns.
Purpose
Despite the growing number of corporate-sponsored sport facilities, public resistance to naming rights sometimes arises. In line with other supporter-based financial instruments such as fan bonds or shares, the possibility arises that a sport club’s supporters could invest in the stadium naming rights to secure a traditional name, possibly by initiating a crowdfunding project. The purpose of this paper is to evaluate the factors separating potential capital providers from non-participants and to determine which factors influence the investment decision.
Design/methodology/approach
The authors used an online questionnaire to evaluate respondents’ willingness to participate in a crowdfunding project. The data were analyzed by logit and probit regressions. The link was posted to selected online fan forums as well as to clubs’ fan group caretakers in Germany. In total, 708 respondents fully completed the questionnaires. Additionally, the authors provided the initial results of a proposal for a hypothetical reward-based crowdfunding project that was also part of the questionnaire.
Findings
The findings indicate that the most involved participants who support traditional values in sports are the most willing to participate in a crowdfunding project. Thus, crowdfunding can actually be seen as a supporter-based instrument that is an alternative to existing sport facility naming rights models. However, the analysis also indicates that the sums that can be generated through crowdfunding are limited.
Originality/value
Insight into a relatively new financial instrument is provided, and an alternative approach to sport facility naming rights management is offered. Ultimately, a combination of a crowdfunding project with financing by a certain number of sponsors supporting a traditional name is proposed, which may be a possible future solution that sport facility naming rights management groups can pursue.
The sale of naming rights to sport facilities is a widespread practice. However, there may be public resistance to naming rights because sport remains associated with tradition and local identity. In response, sport facility operators have searched for alternatives. The newest naming alternative comes from the stadium in Nuremberg, where the Consorsbank initiated a crowdfunding project. In this study, we primarily aim to evaluate the factors separating capital providers from non-participants and to determine which factors influence the investment decision. This study provides insights into a new financial instrument by focusing on a crowdfunding project in sport that was actually implemented. The findings, which are based on between-group comparisons and logit and probit regressions, indicate that participants who identify with the project are generally the most willing to participate in a crowdfunding project. Additionally, the findings underline the relevance of effectively integrating the most involved groups into a campaign.
Purpose
The purpose of this paper is to focus an empirical investigation on the financial ramifications of regulatory policies on American professional team sport leagues, while at once including the inseparable effects on the outcomes of contests. The authors conduct a comparative analysis of the impact of alternative regulatory mechanisms adopted by American professional team sport leagues, and their implications for the league performance.
Design/methodology/approach
The paper conducts a comparative analysis of ten years of financial and contest data from Major League Baseball (MLB) and National Hockey League (NHL). Using relative measures of payroll and profits for the two leagues, the authors test hypotheses on the impact of the market-based payroll taxes of the MLB with the strict payroll limits imposed by the NHL and their relationship to both financial and contest outcomes of the two leagues.
Findings
The comparison of MLB and NHL shows that market-based tax incentives are more consistent with the league financial objectives than strict, enforced mandates, suggesting that comparatively higher profits are associated with the MLB’s approach when compared to the strict bounds imposed by the NHL. Conversely, the comparison of player costs in the NHL and MLB reveal no distinguishable features based on the alternative regulatory methods.
Originality/value
This paper provides an initial, valuable assessment of different regulatory mechanisms on the on- and off-field (-ice) performance of MLB and NHL. Given that MLB has adopted market-based tax incentives to regulate payroll (the competitive balance tax), and the NHL has imposed strict payroll limits (hard salary cap), the authors at once consider MLB’s innovative revenue-sharing system alongside the NHL’s more conventional and restrained method of revenue redistribution, and their implications for performance.
Professional European football clubs have been hypothesized to maximize sporting or financial objectives. We analyze the impact of various ownership structures on the realized management efficiency in maximizing profitability and national sporting success. Therefore, we apply the time-varying stochastic frontier model by Battese and Coelli (1995) to an unbalanced panel from England and France between 2006 and 2012. French professional football is characterized by a shift towards private investors. The empirical results show that clubs majority-owned by private investors are less efficient than other clubs in French Ligue 1. In English professional football, the majority of takeovers is pursued by foreign investors. Previous research has shown that foreign investors increase financial resources and team investments. In contrast, we show that foreign investors reduce both financial and sporting efficiency. The analysis of survival and financial team efficiencies of club ownership structures indicates that clubs tend to compete by investments rather than efficiency.
Eine der „schönsten Nebensachen der Welt“ hat sich zu einer Branche entwickelt, die in Deutschland Umsätze in Milliardenhöhe erwirtschaftet. Profi-Fußball ist zweifellos zu einem wichtigen Zweig der Unterhaltungsindustrie avanciert und damit von hoher ökonomischer Relevanz.
Kai Teichmann analysiert die sportlichen und wirtschaftlichen Erfolgsfaktoren des Fußballsports empirisch und berücksichtigt dabei auch standort- und unternehmensspezifische Rahmenbedingungen. Dabei konzentriert er sich auf die strategischen Entscheidungen von Fußballunternehmen wie Mannschaftsbesetzung, Gestaltung des Stadions und Wahl der Rechtsform. Die Ergebnisse zeigen, dass sportlicher Erfolg vor allem durch überdurchschnittlich hohe Investitionen in den Spielerkader entsteht und - im Gegensatz zum Top-Management - die Besetzung der Trainerposition erfolgsneutral ist. Insgesamt lässt sich festhalten, dass sportlicher und wirtschaftlicher Erfolg des Fußballunternehmens einander bedingen.
Taking the example of Germany, this article analyzes whether listed family firms are an asset class on their own with attractive diversification properties. Family firms have become increasingly popular after the most recent financial crisis because they are assumed to do business in a more honorable manner and with a more long-term perspective. Family firm research has collected some theoretical and empirical evidence substantiating that family firms indeed could behave differently compared to their non-family peers, thus supporting the expectation of attractive diversification properties. The empirical analysis applies available family firm stock indexes for an inexpensive quick check. At first sight the results for the longest time series seem to support that family firm shares indeed do dispose of favorable diversification properties. However, they seem to have disappeared in the more recent time frame. The reason for that is unclear as the practice of index providers to lengthen the time series of their indexes with simulated past performance based on the launch date portfolio might have also affected the results (survivorship bias), demonstrating potential pitfalls of a quick check. But nevertheless, the findings of family firm research indicate that it could be worthwhile to go beyond this quick check. Recommendations how to advance the analysis of investments in listed family firms to the next level are provided.
This study is based on the analysis of the football clubs shares that make up the STOXX Europe Football Index as risk-diversifying assets. All football clubs are listed on a stock exchange in Europe or Eastern Europe, Turkey, or the EU-Enlarged region. To do this, we will demonstrate through the autocorrelation matrix and the Bayesian Network Analysis that the STOXX Europe Football Index is not correlated with the European Stock Market Index. The results of the study show that the STOXX Europe Football Index is not correlated with the European Stock Market Index, and it will act as alternative investment. The analysis shows that these alternative assets could be included in an investment portfolio with the aim of diversifying them, thereby reducing their overall risk.
From its inception, the federal securities law regime created and enforced a major divide between public and private capital raising. Firms that chose to “go public” took on substantial disclosure burdens, but in exchange were given the exclusive right to raise capital from the general public. Over time, however, the disclosure quid pro quo has been subverted: Public companies are still asked to disclose, yet capital is flooding into private companies with regulators’ blessing. This Article provides a critique of the new public-private divide centered on its information effects. While regulators may have hoped for both the private and public equity markets to thrive, they may instead be hastening the latter’s decline. Public companies benefit significantly less from mandatory disclosure than they did just three decades ago, because raising large amounts of capital no longer requires going and remaining public. Meanwhile, private companies are thriving in part by free-riding on the information contained in public company stock prices and disclosure. This pattern is unlikely to be sustainable. Public companies have little incentive to subsidize their private company competitors in the race for capital--and we are already witnessing a sharp decline in initial public offerings and stock exchange listings. With fewer and fewer public companies left to produce the information on which private companies depend, the outlook is uncertain for both sides of the securities-law divide.
Research question: In this study we analyse whether ownership concentration serves as a corporate governance (CG) mechanism for professional football clubs in Europe and show its impact on clubs’ sporting performance. Based on stakeholder salience theory, we examine how investors exert their salience and which objectives they follow. Specifically, we differentiate between economic and sporting investor types and examine whether economic investors act as a CG mechanism.
Research methods: We employ a database of 160 privately and publicly owned football clubs in Europe for the period 2002–2015 to measure the effects driven by ownership concentration after controlling for endogeneity based on a dynamic panel generalised method of moments.
Results and findings: The results indicate that economic investors favour sporting over economic performance. We conclude that the investments in player talent are made under high risk of outcome uncertainty and economic investors do not, or to a lesser extent, monitor club managers’ actions and do not serve as a CG mechanism.
Implications: This implies a need for football clubs’ investors to redefine their role to ensure a functioning governance system. The results further imply that archival CG research in football clubs should acknowledge the dynamic relationship between CG mechanisms and a club’s performance.
1. Research objectives
The European market for football club investors is undergoing a significant transformation, with German clubs opening up for strategic investors, French clubs being taken over by private majority investors, and English top-league clubs experiencing an influx of foreign investors. Economic and legal politics have played an important role in the deregulation of closed member associations.
2. Research methods
This paper aims to summarize the history and market situation of the ‘Big Five’ European leagues, review available theory and empirical evidence on incorporations and public and private investors, and suggest research gaps that deserve further attention. The authors have also constructed a unique database covering all owners in the two premium divisions in England, France, Germany and Italy for the period from 2003 to 2014.
3. Results and findings
The available articles in the growing research field of football club investors cover various theoretical areas, such as the application of property rights theory to European football clubs. In addition, several empirical papers analyze the financial and sporting impact of domestic and foreign private investors and public listings. All these studies highlight the increasing importance of club ownership in the rat race of European football.
4. Implications
Nevertheless, some research gaps remain to be studied at an appropriate depth. First, further empirical studies should analyze the impact of incorporations in German football and the entry of private majority investors in France. Furthermore, future research may address the paradox of de-listings in England and additional listings in continental Europe. Finally, this article identifies the impact of foreign investors and multi-ownership synergies as promising research fields. In this respect, the article provides some managerial implications for football club owners, managers, and regulators.
Entrepreneurship is an integral part of sport but less is known about how different types of entrepreneurship facilitate innovation. The aim of this paper is to develop a theory of sports-based entrepreneurship that incorporates different sub-categories of entrepreneurship such as social, technological and international. Specifically, the article connects the entrepreneurship and sport management literatures by proposing a theory of sport-based entrepreneurship, which can be used as a theoretical framework for future research. In addition, the paper provides a unique insight for sports practitioners and public policy planners wanting to focus on entrepreneurial ways to manage sport-based organizations.
Book synopsis: Managing Football is the first book to directly respond to the rapid managerial, commercial and global development of the sport and offers a thorough analysis of how the football industry can meet the challenges that flow from these developments. Expertly edited by two well known specialists in football business management, it draws together the work of a world-class contributor team to form a comprehensive analysis of the most important issues facing the managers of football businesses across the world. The cutting edge analysis examines all the important business challenges in the football industry and the management of football businesses and covers all of the key football markets including England, Spain, France, Italy, Germany, Australia, North America, China, South Africa, South Korea, the Netherlands & Belgium, and Mexico. Managing Football is simply a must-read for anyone studying or working in football business management and is set to be an important landmark in this rapidly moving and globally expansive field.
This article takes a look at the development of listed private equity funds and the empirical data that shows the performance of the asset class. It shows that while the idea of listed private equity is not new, it is still relatively unfamiliar to academics and investors alike. It identifies some of the challenges posed by traditional private equity, and then demonstrates how listed private equity deals with-and somehow resolves-some limitations. This article also discusses asset allocation, investment activities in listed private equity, and private equity indices.
This study considers the game-related performance of two listed soccer clubs in Italy which share the same stadium: Roma and Lazio. We introduce the performance of the archrival in the analysis. The high level of rivalry in sports should lead to a feeling of pleasure at the suffering of another group (known in German as Schadenfreude) and we assume to see the satisfaction of investor fans with the defeat of the archrival. Likewise, the win of the archrival can have a negative impact on the mood of investors. This study shows that, when club supporters experience the negative performance of their team, the results of their archrival can affect their investment decisions. It is therefore proven that, at least in this respect, the investors (also widely represented by club supporters) are driven by the sentiments conveyed by rivalry which, considered to be a source of emotion, may be relevant to the market.
This chapter discusses the problem of selecting optimal security portfolios by risk-averse investors who have the alternative of investing in risk-free securities with a positive return or borrowing at the same rate of interest and who can sell short if they wish. It presents alternative and more transparent proofs under these more general market conditions for Tobin's important separation theorem that “ … the proportionate composition of the non-cash assets is independent of their aggregate share of the investment balance … and for risk avertere in purely competitive markets when utility functions are quadratic or rates of return are multivariate normal. The chapter focuses on the set of risk assets held in risk averters' portfolios. It discusses various significant equilibrium properties within the risk asset portfolio. The chapter considers a few implications of the results for the normative aspects of the capital budgeting decisions of a company whose stock is traded in the market. It explores the complications introduced by institutional limits on amounts that either individuals or corporations may borrow at given rates, by rising costs of borrowed funds, and certain other real world complications.
In the US, most economists argue that professional sports teams are profit‐maximising businesses, but it is a widely held view in Europe that professional football clubs are not run on a profit‐maximising basis. This belief has important implications for the impact of widely‐advocated policy measures, such as revenue sharing. This paper looks at the performance of 16 English football clubs that acquired a stock exchange listing in the mid‐1990s. If the European story is true, we should have observed a shift toward profit‐maximising behaviour at these clubs, under the assumption that investors were attracted to these football clubs to earn a positive return. This paper finds no evidence of any shift in the behaviour of these 16 clubs after flotation. This result is consistent with the view that football clubs in England have been much more oriented toward profit objectives than is normally assumed.
This article provides a framework for analysing the character and degree of ownership engagement by institutional investors.It argues that the general term “institutional investor” in itself doesn’t say very much about the quality or degree of ownership engagement. It is therefore an evasive “shorthand” for policy discussions about ownership engagement. The reason is that there are large differences in ownership engagement between different categories of institutional investors. There are also differences in ownership engagement within the same category of institutional investors such as hedge funds, investment funds,etc. These differences arise from the fact that the degree of ownership engagement is determined by a number of different features and choices that together make up the institutional investor’s “business model”. When ownership engagement is not a central part of the business model,public policies and voluntary standards aiming to improve the quality of ownership engagement among institutional investors are likely to have limited effect. Based on an empirical overview of the relative sise of different categories of institutional investors, the article identifies a set of 7 features and 19 choices that in different combinations define the institutional investor’s business model. These features and choices are then used to establish a taxonomy for identifying different degrees of ownership engagement ranging from “no engagement” to “inside engagement”.
Louis-Schmelling paradox, 1. — The inverted joint product or the product joint, 2. — League standing effect, 3. — Fourth estate
benefit, 3. — Multifirm plants, 5. — Diminishing quality returns, 8. — Input-enthusiasm effect, 8. — Roger Maris cobweb, 12.
— Bobby Layne rigidity, 12. — Archie Moore invisibility, 13.
The main goal of this article is to investigate whether the rates of return on listed companies - football clubs can affect their athletic performance or bookmakers' market expectations. For this purpose 2001-2014 stock prices were collected of three companies - AS Roma, Juventus and SS Lazio - listed on the Milan Stock Exchange as well as their betting odds from the website www.betexplorer.com. The assumption that there are relationships between financial factors and results of sport events or bookmakers’ expectation was posed after the study of the world literature in this field.
Entrepreneurship is an integral part of sport but less is known about how different types of entrepreneurship facilitate innovation. The aim of this paper is to develop a theory of sports-based entrepreneurship that incorporates different sub-categories of entrepreneurship such as social, technological and international. Specifically, the article connects the entrepreneurship and sport management literatures by proposing a theory of sport-based entrepreneurship, which can be used as a theoretical framework for future research. In addition, the paper provides a unique insight for sports practitioners and public policy planners wanting to focus on entrepreneurial ways to manage sport-based organizations.
This paper investigates the role of direct infrastructure in a multi-asset portfolio by employing a US transaction-based index which covers the period Q2 1990–Q2 2010. We determine time-varying asset allocations using a mean-variance as well as a mean-downside risk optimisation algorithm and show that infrastructure plays an important role in both models. It is allocated predominantly to portfolios that exhibit low-to-medium risk with maximum allocations of 32 and 28%, respectively. With increasing investment horizons, infrastructure is also attractive to investors who aim at earning higher returns, and especially to those who wish to protect low-expected-return portfolios from downside risk. As infrastructure and large cap stocks are highly correlated over longer investment horizons, the allocation to infrastructure is sensitive to whether large cap stocks are allocated to the portfolio. Furthermore, we find that infrastructure is not a substitute for real estate.
This paper investigates the properties of a market for risky assets on the basis of a simple model of general equilibrium of exchange, where individual investors seek to maximize preference functions over expected yield and variance of yield on their port- folios. A theory of market risk premiums is outlined, and it is shown that general equilibrium implies the existence of a so-called "market line," relating per dollar expected yield and standard deviation of yield. The concept of price of risk is discussed in terms of the slope of this line.
Motivated by aspects of European soccer club governance (members' clubs supporters' trusts), a first formal analysis of fan welfare maximization as a club objective in a sports league is provided, with comparisons to objectives studied previously (profit and win maximization). Positive comparisons focus on team qualities, ticket prices, attendances and the impact of capacity crowds; empirically observed ticket black markets and inelastic pricing are consistent only with fan welfare maximization. Normatively, social welfare (aggregate league surplus) is well-served by a league of fan welfare maximizers, or sometimes win maximizers, but not profit maximizers; leagues should not normally make profits.